Optimal Interest-Rate Smoothing

By Michael Woodford. 2003

486 citations recorded by the source corpus.

View Paper: https://www.semanticscholar.org/paper/c7036ebd86ec5beb3e61184636553fc4d05a7c04

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In Economics and Econometrics

Citations in the corpus

Monetary policy and exchange rate overshooting: Dornbusch was right after all* (2009, background): “are consistent with what has become considered to be good monetary policy conduct, see Woodford (2003) .”
Shocks, Structures or Monetary Policies? The Euro Area and US After 2001 (2008, unknown): “1This principle has been analyzed extensively by Rotemberg and Woodford (1999), and Woodford (1999,2003).”
Practical Model-Based Monetary Policy Analysis: A How-To Guide (2006, background): “Woodford (2003b) emphasizes that high weights on the lagged interest rate in the reaction function may represent optimal inertia in the policy rate, as it allows smaller current changes in short-term rates to have larger effects on rates of returns in financial markets and the real economy, if they…”
Why are Target Interest Rate Changes so Persistent (2012, background): “…uncertain about the quantitative effects of policy changes (as in Brainard 1967), it gives policymakers more control over long-term interest rates via the expectations channel (Woodford 2003a), and it may reduce financial sector instability because of the increased predictability of interest rates.”
Inflation Persistence and Optimal Monetary Policy in the Euro Area (2002, methodology): “(23) As in (Woodford 2003a, chapter 3), we can take a log-linear approximation to Equation (19) around a steady-state in which p̃t(f) PF,t 1 PF,t k PF,t 1 for all t and k 0 and obtain that Et ∞ k 0 (αFβ)k {p̂t(f) m̂cFt,t k(f) kτ 1πF,t τ} 0 , (24) where we have defined p̂t(f) lnp̃t(f) PF,t and πF,t…”
Determinacy and Learnability of Monetary Policy Rules in Small Open Economies (2006, background): “In a closed economy context, the usual condition for determinacy is the so-called “Taylor Principle” see Woodford (2003b).”
The role of house prices in the monetary policy transmission mechanism in small open economies (2010, result): “This is in line with Rotemberg andWoodford (1997), which find central bank behaviour to be well modelled by a policy rule that sets the interest rate as a function of variables such as output and inflation.”
Macroprudential Rules and Monetary Policy when Financial Frictions Matter (2015, unknown): “This behavior is widely observed in practice and has been shown by Woodford (2003) to be a desirable outcome in a model for optimizing private sector behavior, because it can help to steer private sector expectations of future policy.”
How the World Achieved Consensus on Monetary Policy (2007, background): “…some stylized facts about interest rate policy-that the Federal Reserve ordinarily prefers a “continuity of the short rate” and that federal funds rate target changes are ordinarily “highly persistent and seldom quickly reversed” to exert maximum leverage over longer-term rates (Woodford, 2003b).”